A few weeks ago, a column I wrote about the lack of public space charging points in cities highlighted an interesting point about the electric vehicle market: Even if a lot of Americans got plug-in cars, they might not be able to install an equivalent number of charging stations across the nation. As you can see from this graph from Navigant Research, the charging market is primarily dominated by three companies: ChargePoint, EVgo and NRG Home.
They account for 94 percent of the market, meaning that most users are either using a third-party charger or a station supplied by one of these three companies. This has led to a great deal of animosity between the three companies, which have responded to each other by offering their own competing services. But it also has led to an obvious question: if these companies are working against each other, where will electric vehicle drivers find an outlet when they really need one? That’s a problem that has long bugged California, the site of the Model S launch. In a 2015 law, California required that 85 percent of new vehicle charging sites should be owned by private companies.
While the law would have helped accelerate infrastructure development, it was also an attempt to boost competition in the industry. And, in the 2017 case of Uber vs. Simi Valley, it might have even created the next e-commerce titan by forcing the cities to procure their power via open bidding, a process that would ultimately make electricity cheaper. But, as Josh Cohn and Nathaniel Greenwood at Bloomberg have reported, the effort has backfired. While a few companies have snapped up a significant portion of the charging sites, the number of sites — some 1,000 — is actually down from 2015.
While this might benefit the automakers — including those using a partnership with NRG Home to set up charging stations outside their gas stations — it’s bad news for consumers and government. This problem goes well beyond California. In March, Reuters looked at where charging stations are located. The story focused on areas where locals are undercutting each other’s offers, effectively paying for the privilege of using one of those charging stations — often using home addresses to verify them — rather than paying a franchised provider.
Why does this matter to the electric vehicle market?
Obviously, a lack of robust charging is the main reason that electric vehicles can’t be had at much cheaper rates than gasoline, even if they provide similar driving efficiency and range. But the charging issue is also important because it represents a chance for a truly innovative entrepreneur to disrupt the market. The recent Domino’s Pizza e-commerce business is a case in point. If such a disruptor emerges in the electric vehicle market, it will be one to watch.
All this brings us back to our discussion of recent developments in California. As Cohn and Greenwood point out, the state is now working to break the grip of the three big charging companies. It has already made 20 percent of the charging stations available through competitive bidding, with the rest to be ready for next month.
And, as Cohn and Greenwood write, the moves “appear to be driving a competitive dynamic.” Just two weeks ago, the Wall Street Journal reported that, while the number of charging spots may be up, the average cost per plug was down by 30 percent. Clearly, the push for open bidding should be big news for the electric vehicle industry.